Santander

A sharp turn in market sentiment following the announcement of a travel ban by the US has destroyed any hopes for a revival in the corporate bond market, sending high grade spreads 25bp wider as borrowers ducked and covered until at least next week.

Once again, corporate bond markets have staged a recovery after a shutdown of several days as asset prices plummeted in response to the growing coronavirus outbreak. Three industrial companies plus JP Morgan issued bonds in the US on Tuesday, which “all went exceptionally well” according to a head of syndicate in London. Danone launched on Wednesday the first euro corporate issue of the week, paying a high spread but small new issue premium.

Deutsche Bank said this week that it will keep its $1.25bn 6.25% additional tier one outstanding beyond its first call date, having become the second European bank to extend the life of an AT1 for economic reasons.

On Monday, a day when European stock indices plummeted, hedge fund giant Bridgewater Associates was executing short positions against 37 of the continent's companies, particularly in France, Germany, Spain and the Netherlands.

UK electricity distributor Electricity North West, which manages electricity networks in the north west of England, has started marketing US private placements. However sources are worried the market will not cope with pricing transactions amid wild swings in Treasury yields.

Volatility in the financial institutions bond market drove spreads even wider on Monday as a crash in the price of oil added to fears over the extent of the coronavirus outbreak. It was enough to close the primary bond market for the foreseeable future, said market participants.

Lloyds Banking Group is giving investors a chance to switch out of a legacy tier two and into a new instrument, without the basic terms of their securities changing.

Rating: Baa1/A/A-

Banks are delaying their plans to raise funding in the euro market, as credit spreads drifted wider on news about the spread of the Covid-19 coronavirus.

Spain was able to raise €5bn of 30 year paper on Tuesday, braving difficult market conditions to close the deal. While the trade was a success, the sharp fall in the order book at the final spread indicated some investors are beginning to push back on price.

Santander UK is looking to buy back part of a subordinated bond issued in 2013 in a bid to “optimise its regulatory capital structure”.

Spain has announced another trip to the ultra-long end, electing to come to market in spite of volatility sparked by increased fears around the spread of coronavirus.